Ivan Feinseth of Tigress Financial Partners initiated coverage of VeriFone Systems Inc (NYSE: PAY) with a Buy rating given the company's strong brand equity and leadership, which can generate new customer wins.

According to Feinseth, the past few years for VeriFone has been full of challenges and setbacks, including currency woes, legislative changes, ramp up of investments in new products and perhaps most notable, regulatory delays. While this caused VeriFone's stock to fall from nearly $40 per share in 2015 to around $15 last October, a transition is underway, which will generate sustainable momentum.

Market Leader

Feinseth argued that VeriFone is best positioned to take advantage of the secular shift in electronic payments. In fact, the company is already a market leading provider of electronic payment systems and services with more than 30 million terminals globally and more than 50 percent of the world's EMV (Europay, Mastercard and Visa) card terminals.

Moreover, VeriFone processed over seven billion transactions a year so it is well positioned to benefit as fewer transactions are cash-based and more are some form of an electronic form.

Feinseth also argued that VeriFone not only benefits from the sale of terminals but from the fees it collects for facilitating payments and connectivity for merchants to financial institutions.

Restructuring Initiatives

Finally, Feinseth pointed out that over the past year VeriFone has undertook a review of poor business units and also undertook cost-cutting measures to improve efficiency and achieve significant cost savings this year and beyond.

These actions will help management better scale up production for the deployment of new products, especially as it transitions existing clients from the legacy platform.

Bottom line, VeriFone is "one of the best ways to play the growth in electronic based payment transactions" and "significant" upside in the stock can be realized.